French car sales slide in January

PARIS -- French new car sales fell 11.9 percent in January as thrifty consumers dashed hopes of an imminent recovery in Europe's worst-hit major car market, the country's car industry body said on Monday.

The CCFA automobile association said new car registrations in January dropped to 154,223 from 175,107 in January 2003. Sales slid 7.7 percent on a comparable business days basis -- the seventh straight monthly fall.

Car sales in the eurozone's second biggest economy skidded 6.3 percent last year as worries over France's high jobless rate shook consumer confidence and capped spending on big-ticket items.

"This is a poor start to the year," said Adam Collins, autos analyst at Commerzbank. "We are still not seeing a turn in the French consumer...which is bad news for those expecting a recovery."

Unemployment in France rose to 9.7 percent in December -- a near 3-1/2 year high -- suggesting a recovery in spending on cars may still be some way off despite pricing on a par with European rivals.

French motorists have been slower than their counterparts in Germany and Spain to return to showrooms after an industry-wide downturn, and most analysts do not expect a decisive upswing until at least the second quarter.

Some say that apart from the launch of Renault's popular Megane family range, the product offering from the French duo has otherwise been slim over the last year, and that this could be hampering sales.

They also cited France's high saving rate, and unpopular public reforms, which could be dampening consumer confidence.

Renault has said it expects the French market to grow three percent this year while PSA is more cautious, predicting flat car sales in 2004.

More than 15 percent of French household spending on manufactured goods goes on cars and car parts.